Vijay Mallya: The Story of Fame and Shame

Anik Banerjee Anik Banerjee
Jul 28, 2021 7 min read
Vijay Mallya: The Story of Fame and Shame

Vijay Vittal Mallya, popularly known as Vijay Mallya, is an Indian businessman and an ex-Member of Parliament (Rajya Sabha). He can be commonly recalled as the former owner of the IPL cricket team of Royal Challengers Bangalore.

Furthermore, he is also the ex-chairman of the biggest spirits manufacturing company in India, United Spirits; the founder and former owner of Kingfisher airlines and Force India Formula One team. Mallya still retains his post as the chairman of United Breweries Group.

He is also the face of one of the biggest financial scandals in India and is a subject of extradition efforts by the Indian Government.

Vijay Mallya - Biography
Vijay Mallya - Latest News
Vijay Mallya - Personal Life
Vijay Mallya - Education
Vijay Mallya - The Rise of the Business Mojo
Vijay Mallya - When and How did the Bubble Burst?
How Banks gave huge loans to Kingfisher?
FAQ

Vijay Mallya - Biography

Name Vijay Mallya
Born 18 December 1955
Birthplace Bantwal, Mangalore, Karnataka, India
Age 65 (2021)
Nationality Indian
Education University of Kolkata
Profession Businessman/Politician
Position Founder & Owner of Kingfisher Airlines and an ex-Member of Parliament (Rajya Sabha)
Net worth $1 billion
Father Vittal Mallya
Mother Lalitha Ramaiah
Spouse Sameera Tyabjee Mallya (div. 1987) Rekha Mallya (present)

Vijay Mallya - Latest News

Indian banks led by the State Bank of India plan to sell Vijay Mallya’s share of United Breweries worth Rs 5,500 crores. The banks, which had initially granted loans of huge sums of money to the fugitive, have already filed to recover some of it in the Debt Recovery Tribunal. This has been finally ruled in the favor of the banks after being initially opposed.

Vijay Mallya - Personal Life

Vijay Mallya was born to an affluent business family as a son of the former chairman of the United Breweries Group, Vittal Mallya and Lalitha Ramaiah. Soon after his father’s death, Mallya succeeded his father to become the chairman of the United Breweries Group at the early age of 28.

Vijay Mallya married Sameera Sharma, an air hostess of Air India, in 1986, and their first son, Siddharth Mallya was born on May 7, 1987. However, his first marriage didn’t last long, and soon after they were divorced, Mallya married Rekha Mallya, who is his present wife, in June 1993. He adopted Rekha’s daughter, Leila during the time of his marriage and also has two daughters from his present wife, Leanne, and Tanya.

Vijay Mallya - Education

Mallya spent his school and college days in Kolkata. He was a student of La Martinière Calcutta, where he was appointed House Captain of Hastings house in the final year, following which, he went on to be admitted to St. Xavier's College, Kolkata, where he graduated with an Honours in the Bachelor of Commerce degree in 1976.

He interned in his family’s businesses during his college days. Post graduation, Mallya flew to the United States and joined as an intern at the American part of Hoechst AG.


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Vijay Mallya - The Rise of the Business Mojo

Though Vijay Mallya was born to humble parents, he never decided to settle for a quiet life like his father. He had soaring ambitions and a desire to exceed them. His journey started with United Breweries, which was already an MNC business conglomerate, comprising over 60 companies.

As soon as he joined the business, he worked hard to grow the business and managed to increase the overall turnover by around 64%, reaching US $ 11 billion in 1998-1999. He was already living a lifestyle of that of kings, being dubbed as the “King of Good Times” that eventually became the tagline of Kingfisher.

In the year 2005, Mallya launched his new airline company, Kingfisher Airlines to further diversify his business, which later on became the cause of his downfall.

Kingfisher Airlines
Kingfisher Airlines

Vijay Mallya - When and How did the Bubble Burst?

Within a relatively short span of time, Vijay Mallya got what he aimed for but continued to dream bigger. Kingfisher Airlines was launched at the peak of his career when he was already living a lifestyle that most people cannot even dream of but after a brief spell of success and with skying debts, it was finally shut down in 2012.

Vijay Mallya’s success didn’t seem to last long not because of his ambitious dreams but due to his dishonest ways to achieve the same.

Kingfisher Airlines was a business built on a platform of losses, and as a result of which it has echoed losses ever since it was launched. Intending to overcome the financial burdens, which started to weigh heavy by then, Mallya decided to fly overseas. However, according to the rules, an airline company needs to run its local operations successfully before it can look forward to flying internationally.

Here, Mallya planned to rush things by acquiring another low-cost airline company, Air Deccan by paying over the odds but this viciously backfired Mallya, catalyzed by the rising loans and catapulted by the economic downturn of 2008 and 2009.

Net worth of Kingfisher Airlines
Net worth of Kingfisher Airlines

At the end of 2009, Kingfisher Airlines was already due for a massive sum of Rs 7,000 crores, a major part of which was siphoned by Mallya as loans from 17 Indian banks allegedly to shell companies in Britain, Switzerland, and Ireland. Furthermore, he also left staff underpaid and even unpaid when he couldn’t meet the due amount. Kingfisher Airlines finally crashed in 2012 with the aircraft seized.

How Banks gave huge loans to Kingfisher?

Banks give loans based on the collateral of the same amount given in the loan. But these banks gave loans to Vijay Mallya on items like office stationery, boarding pass printers, folding chairs, computer screens, and wood tables as collateral. The bank’s willingness to provide loans based on current assets as capital created suspicions on the bank officials who passed their loans.

Also, the loans given by SBI were on the trademarks and Goodwill of Kingfisher airlines kept as collateral. SBI chairman OP Bhatt was involved in providing such fraud loans to him. Banks lost their money because of the officials who granted and processed the loans, without checking all the collaterals and taking securities that were to be followed as per rules and regulations. They came under the pressure of their seniors who were bribed by Vijay Mallya. Also, he took the help of his political connections to process such big loans.

The loans taken on the name of Kingfisher Airlines and UB group weren’t used for its actual cause. Banks never knew that the loans taken by Vijay Mallya were laundered overseas to various tax-havens. All this was done with the help of shell companies.

Mallya would have the bank loans moved to these shell firms, which were set up with sham directors for this reason. These companies did not have any source of income and weren’t active at all. The loans taken were only to further his agenda. The directors placed in the shell companies would act according to the command of Mallya. The money was transferred to seven different countries including United Kingdom, United States, Ireland, Switzerland, France, and South Africa.

Furthermore, Vijay Mallya diverted the money he got from the loans to fund his IPL team Royal Challengers Bangalore. He bought the most expensive IPL team RCB at INR 476 Crore with the money of public sector banks. Around 77 payments were done by the SBI bank account of Kingfisher Airlines to the IPL Vendors. He had spent massive amounts lavishly over cricketers from the borrowed money of the banks.

At first, this case seemed similar to those in businessmen getting unlucky. But a closer look reveals this is was a case of smart money laundering. As our Indian banking sector is still developing, there are many loopholes in the system. People like Vijay Mallya took the advantage of such loopholes and made their unhealthy marks on the economic system.

Here is a list of how much loan was taken from each bank:

Rs 1,600 crore State Bank of India
Rs 800 crore PNB
Rs 800 crore IDBI Bank
Rs 650 crore Bank of India
Rs 550 crore Bank of Baroda
Rs 430 crore United Bank of India
Rs 410 crore Central Bank of India
Rs 320 crore UCO Bank
Rs 310 crore Corporation Bank
Rs 140 crore Indian Overseas Bank
Rs 90 crore Federal Bank
Rs 60 crore Punjab & Sind Bank
Rs 50 crore Axis Bank
Rs 600 crore 3 other Banks
Rs 150 crore State Bank of Mysore

The government of India despite its repeated attempts for extradition, is yet to arrest him from the UK, where he has fled post the issuance of the warrants against him.

“The evil that men do lives after them; the good is often interred with their bones.”

The Fugitive Economic Offenders Act was rolled out by the Indian government in 2018 and by this act, Vijay Mallya was labeled as the first fugitive economic offender of the nation. He is now remembered by the same.


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FAQ

How much bank money does Vijay Mallya owe?

Vijay Mallya fled India and moved to London in March 2016 while he owed Indian banks more than Rs 9,000 crore.

When did Mallya leave India?

He left India in March 2016 under the pretext of personal reasons and defrauded at least 17 Indian banks.

What are the major strategic drawbacks of Kingfisher Airlines?

Kingfisher Airlines was under Excessive Debt which was around 7000 crore rupees and its aircrafts was finally seized in 2012.

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